GBP/JPY Trading Between Declining Trendline and Rising Support

The previous GBP/JPY update noted the support area between 129.70-130.00, to hold off a triple top from following through. The market did dip below 129.70, but remains above 129.50 and the support cluster of a rising trendline, and 200 4H simple moving average. The 4H candle in the chart above did indeed close above the 129.70 as well, so no break out just yet. A break above 130.50 can open up some short-term bullish outlook.

Let's look at the 1H chart. Note that at 129.50, the market was also oversold, with the RSI below 30, and price tagging the lower bollinger band, which is 3 standard deviations from the 200 simple moving average. The oversold condition has resolved, with the market hitting 130.50. Still the momentum is bearish, and it will require the RSI to break above 60 to show lost of bearish momentum. But even without lost of bearish momentum, if the market is still in ranging mode as the 4H chart shows, then we can be heading back toward the mean or central pivot area, near 131.50. A break of that opens up 133.40.

On the other side, a failed rally, and a break below 129.50 can open up the bearish outlook, with 128.20 then 126.90-127.00 as conservative and aggressive targets.

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